EU needs ‘FBI for customs,’ says former chief fraud investigator

The EU needs a single customs agency for its common border that operates like an "FBI for customs," according to the outgoing chief of OLAF, Europe's anti-fraud agency.

Giovanni Kessler, who recently left Brussels to head the Italian customs agency, said he believed that fragmented customs enforcement across different EU countries has led to loopholes and perverse incentives that make fraud and smuggling easier.

"We have 28 customs agencies for goods and 28 border guard agencies for people, so 56 agencies for one border," Kessler said in a parting interview on the 12th floor of OLAF's office in Brussels. "My vision is that we have to go further and fully implement the customs union by establishing a European customs [authority]," he said.

The Italian prosecutor's view that the 28 customs agencies should be merged into a harmonized unit is informed by six years investigating high-profile EU corruption cases.

If one case brought home the dangers of fragmentation, it was OLAF's investigation that concluded this year into how the British authorities allegedly turned a blind eye to a massive cross-border fraud network that allowed ultra-cheap Chinese goods to flow into Europe, costing the EU some €5 billion in lost duties and VAT.

Different standards in how countries enforce controls of these goods and tackle fraud has led to significant losses for both the EU and member countries.

Under Kessler's plan, a united EU border force would have been able to keep closer tabs on the extraordinarily low valuations that Her Majesty's Revenue and Customs were allegedly giving to container loads of Chinese goods.

Customs authorities of the 28 member countries are in charge of tackling fraud — especially in cases that could deprive both the EU and national governments of tax revenues. These investigations range over subjects such as false certificates of origin, fraudulent VAT declarations and the evasion of excise duties on cigarettes and alcohol.

Customs services handle over 2 billion tons of goods a year — more than 270 million declarations — according to figures from the Commission.

However, different standards in how countries enforce controls of these goods and tackle fraud has led to significant losses for both the EU and member countries. Such disjointedness, Kessler said, must be fixed if Europe wants to clamp down effectively on smuggling and tax fraud.

"When a good enters a country, after a few hours it's all over Europe but it is controlled according to that country's standard, relying on the IT system of that country, which is different from the IT systems of all other 27 countries," he said.

By Kessler's argument, if Europe has one border and common duties on goods coming in from outside it should also have a federal guardian to ensure "consistency in the quality and quantity of controls," he said, while also "avoiding potentially dangerous and surreptitious competition among member states."

By "dangerous competition" Kessler means the race to the bottom among competing EU countries aiming to attract more traffic to their ports by establishing a reputation for less intrusive customs authorities.

Kessler is returning to Italy to head the country's Customs and Monopoly Agency in Rome, although he remains an employee of the European Commission, seconded “in the interests of the service.” He has been given a role as adviser for the EU's budget department, according to a copy of the decision obtained by POLITICO.

This has raised questions from the European Civil Service Federation, a union of civil servants, because the three-year arrangement will allow him to qualify for an EU pension, which employees are entitled to only after 10 years of work for the institutions. His salary is also being topped up by the Commission to bring it up to the level of his OLAF job — it's not yet known by how much.

"All this in the name of the interest of the service on which no explanation is provided, as if this catch-all formula could justify any arrangement," the union said.

Kessler says the arrangements are in line with EU regulations and do not constitute a special deal.

JustWords

Saintixe

@justwords
I agree with you. I had forgotten the NI borders conundrum.

I have said it a long time ago there will be a hard border and Belfast along Londonderry will know again quite interesting days. Call it Karma when it comes to the DUP.

Posted on 11/2/17 | 4:04 PM CET

alan

I guess that a single customs agency does not exist because member states and their electorate have never been prepared to cede that control to the EU.
I doubt that that has changed in anyway.

The more interesting aspect of this is the transfer/secondment arrangement and its financing & pension entitlements. Will any EC employee with less than 10 years service now beentitled to request similar treatment?

Posted on 11/2/17 | 7:07 PM CET

That's right

I don’t see how the second part of the article relates to the topic, nor why it isn’t just mentioned en passant. Disingenuous.

However the subject is very interesting and shows what path the Union should walk in order to gain efficiency, transparency and higher market quality.

Posted on 11/2/17 | 7:55 PM CET

Pexit

For sure great idea…let’s the EU mafia take control of the supposed organization that is in place at a national level…so only the right people will be able to make “business “ as usual…

And Kessler should be in jail for corruption if he was not a protected puppet of the elite…

Posted on 11/3/17 | 12:27 AM CET

Franceschino

what a great idea!!!

Posted on 11/3/17 | 5:07 PM CET

Franceschino

Another great idea could be this one:
Kessler understands that now it is time to shut up and make the job that he got thanks to the poitical support of the Italian former prime minister (Matteo renzi, his most intimate friend).
Kessler could try to demonstrate not to be also in Italy the total failure he has been for 6 years in OLAF.
Kessler could silently disappear from the EU scenario, with great relief of everyone…

Posted on 11/3/17 | 5:10 PM CET

Jean

A good start, but the EU needs a full fledged FBI, not just for customs, but for investigation of any crime that impacts more then one single member state, or when there is serious concerns local police forces are corrupt or unable to solve criminal issues on their own.

Posted on 11/3/17 | 11:53 PM CET

Bernd

Kessler has forgotton the easiast and cheapest way for harmonization: ONE common IT-System instead of 28 different ones we are having now.